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Post by Chahta on Jan 7, 2021 17:18:43 GMT
I want to do my first conversion this year. Is it best to wait until later this year or do it now? I am thinking that there could be tax changes enacted for 2021 so waiting might be best. What are you all convertors doing?
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Post by Capital on Jan 7, 2021 23:28:00 GMT
I want to do my first conversion this year. Is it best to wait until later this year or do it now? I am thinking that there could be tax changes enacted for 2021 so waiting might be best. What are you all convertors doing? Chahta it depends upon what you think the market will do. If up convert now. If you think down wait. I am not in a position to convert yet; however, I believe that in the future, when I'm retired and trying to convert, I will make my RMD and and the bulk of my conversions in January.
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Post by yogibearbull on Jan 7, 2021 23:47:36 GMT
There is whole year ahead. Convert during market selloff(s) to minimize tax hit.
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Post by steadyeddy on Jan 17, 2021 0:59:33 GMT
There is whole year ahead. Convert during market selloff(s) to minimize tax hit. Agree. Also, I am not sure the new admin will be able to make tax changes this year given the razor thin margins in both houses. My 2 cents.
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Post by yogibearbull on Jan 17, 2021 1:33:26 GMT
There is whole year ahead. Convert during market selloff(s) to minimize tax hit. Agree. Also, I am not sure the new admin will be able to make tax changes this year given the razor thin margins in both houses. My 2 cents. I didn't mean possible tax changes. An example may help. Suppose one has $10K in T-IRA, wants to convert all, and is in 22% marginal tax bracket. Choice is a) to convert now, or b) wait for a sharp drop, say 20%, and then convert. For case a), tax is $10K x 0.22 = $2.2K For case b), tax is $10K x 0.80 x 0.22 = $1.76K So, Roth Conversion when market is down is more effective in getting money out of T-IRA and into R-IRA. One may say it won't matter if T-IRA was larger and one wanted to convert only $10K. But then, higher proportion of T-IRA account is converted when market is down. Above benefit doesn't depend on tax policy changes.
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